Why ABC New Jersey Chapter is Suing Jersey City

0 September 18, 2014  Featured, State & Local Construction

Earlier this month, the New Jersey Chapter of Associated Builders and Contractors (ABC) filed a complaint in federal court against Jersey City, N.J., in response to its 2012 ordinance requiring developers and contractors to execute union-favoring project labor agreements (PLAs) on certain tax-abated projects in Jersey City. This ordinance amended existing pro-PLA city code that had been in place since 2007.

Jersey_City_Skyline_Jan_2006

Jersey City, N.J. skyline courtesy of Wikipedia

In an op-ed published yesterday by the Jersey Journal, ABC New Jersey Chapter President Patrick Stewart explained why the lawsuit is critical for taxpayers and the construction industry in northern New Jersey.

Here are the highlights:

Opinion: Why a group representing nonunion construction workers is suing Jersey City
By PATRICK STEWART
GUEST COLUMNIST
Earlier this month, two new projects entered the Jersey City landscape when a developer from Purchase, N.Y., announced plans for a $141 million residential tower in Liberty Harbor North, and the second Trump Plaza tower project secured a $140 million loan to proceed with construction. Both developers are seeking preferential tax treatment from the city as an incentive to proceed with the projects, which will create hundreds of construction jobs in the short term and, presumably, ongoing employment in the finished facilities. A win-win, right?

Not so fast. Under an ordinance linking tax abatements on certain projects with Project Labor Agreements (PLAs) – labor contracts that force builders to use union labor exclusively – Jersey City is essentially telling a substantial contingent of builders and contractors without union relationships that they’re not welcome to participate in the city’s growth. To be precise, based on 2013 figures from the U.S. Bureau of Labor Statistics, 100 percent of the construction work on tax abated projects subject to the city’s ordinance is slated to be performed by a small sliver of the construction industry workforce – barely 15 percent – who belong to unions.

That’s nice work if you can get it, and that’s an ominously big “if,” as more than 80 percent of builders in New Jersey are not union-affiliated. Excluded from consideration are highly qualified companies who know how to complete projects on time and on budget, and have proven track records on both public and private jobs. Many of them are based in Jersey City and Hudson County, and employ local residents.

The Associated Builders and Contractors, New Jersey Chapter (ABCNJ) believes work should be awarded based on merit, not who can cut the best back room deals. That’s why we filed suit last month to overturn the city’s anachronistic and illegal “Construction Project Labor Agreements” ordinance. Private construction projects, we feel, should remain just that – private. By creating arbitrary restrictions, like requiring PLAs, government is interfering in free enterprise, putting an onerous burden on prospective contractors, and driving up costs, while preempting state and federal law.

Hiding behind the cover of preferential tax treatment – which ultimately benefits the city by bringing in new construction, jobs, and, down the road, tax revenue – does not change the fact that Jersey City is trying to illegally meddle in the affairs of private enterprise. The result? Residents of Jersey City (and elsewhere in the Garden State) who work in the construction industry, but not for the small percentage of contracting firms that are unionized, will sit on the sidelines as the privileged few enjoy the fruits of labor’s political patronage.

Unions represent so few, but under the existing ordinance derive 100 percent of the benefit of Jersey City’s growth, at least to the extent such growth involves preferential tax treatment. ABCNJ simply seeks a level playing field for all contractors, based solely on their ability to complete the job within a prescribed budget. Isn’t that the American way?

If this PLA requirement is allowed to stay on the books, the big losers will be taxpayers and the vast majority of the construction industry that is deprived of the opportunity to compete for projects supported by their own tax dollars.

The negative impact of PLAs on construction costs is well documented. PLAs have a history of increasing construction costs on public projects by nearly 20 percent. On private projects, the owners will absorb these added costs, but it is important to note that private projects subject to the Jersey City PLA requirement will be recipients of financial incentives from the city. To a certain extent, taxpayers will still be left holding the bag.

If the courts uphold this PLA requirement, the construction industry workforce will ultimately be the biggest loser. PLA requirements frequently fail to deliver local jobs. If Jersey City’s elected leaders really want to create jobs for local residents, they would repeal the pro-PLA policies and give all qualified local contractors a fair opportunity to compete for projects in their own community.

A video, Jersey City Need Not Apply, released in January 2014 by the Jersey City Political Action Committee (JCPAC), documents how Jersey City policies promoting government-mandated PLAs have served as a barrier to new jobs for local minority residents and contractors in Jersey City.

 

This policy is nothing more than a handout to politically connected construction union bosses at the expense of taxpayers and the local construction industry workforce. The merit shop community looks forward to the federal court taking prompt action to strike down this pro-PLA policy for the good of all city residents.

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